CMC Blog

"Ad fraud" Is BIGGER Than Ever.

At the end of July, Procter & Gamble, the FMCG giant, reported
a massive cut on digital advertising spending over the previous
quarter of about $140 Million because of Brand Safety and
Ineffective Ads. P&G's Chief Financial Officer, Jon Moeller, indicated as major reasons for
this decision, fake traffic generated by bots and inappropriate
content associated with their advertisements. On the same note,
also spending on agencies was cut due to transparency
issues.

Ad fraud indeed is a problem and it costed advertisers around $7.2
Billion last year. The prediction is even worse: according to Business
Insider this number could double to $16.4 Billion in 2017 and
reach soon $50 billion during the next decade, if
not addressed effectively.

Bots can easily replicate humans' behaviour on web pages, creating
those interaction that advertisers are looking forward to. In
reality, advertisers do not have the power to verify 100%
the downstream ad supply chain, and in fact they end up
with huge losses.

This loss is concretized in ROI negatively
impacted, digital media being less
effective and a lot of money placed in monitoring expenses
to prevent the frauds. That is why Adfraud is a top concern
regarding digital media planning and buying. According to MyersBizNet,
78% of brand marketers are highly affected by Adfraud and
bot traffic, making it their priority issue even major
than ad blocking.

While, big buyers like P&G waits, some organizations are
looking forward to solving the adfraud problem, and more generally
are trying to create a more transparent and relevant
adspace. Specifically, some businesses are focusing their
effort on creating blockchain platforms that can be used as a new
ad space and that thanks to their structure can by nature answer
the problems we are talking about.

But Wait, What Is Blockchain?

Blockchain, can be describe as a shared infrastructure
that allows value transaction to be secured through a complex
cryptography and executed with no middleman on a decentralized
network that prevents fraud or failure.

The earliest successful implementation of this technology is Bitcoin, a cryptocurrency
launched in 2008 that is revolutionizing the banking system
worldwide. In the example of Bitcoin, the blockchain technology
allows money to be transferred, making sure the value sent is
exactly equal to the value received, with substantially lower fees
to be paid to banks but with the certainty of having that
transaction secured, possibly even more safely than when
transferred through the traditional banking system.

As of today, Ethereum, is the most powerful
platform or decentralized network, that allows the blockchain to
run. It is also an open source protocol, which allows anyone to
build applications on top of it. In fact, not only it can be
applied to the finance industry with cryptocurrencies like Bitcoin,
but it can be also applied to industries such as:

Is There a Bitcoin of Digital Advertising?

The digital advertising industry is also a field in which some
players are starting to invest and create platform based on
blockchain.

Here two interesting examples of start-ups that are betting
heavily on blockchain today, to have a competitive advantage with
the giants of the industry (Google, Facebook, etc.) in a couple of years, when the
technology will be ready to scale.

The first case is the one of MetaX, which is a
start-up dedicated to building blockchain-based protocols and
decentralized applications for the digital advertising
industry. In the words of Ken Brook, Founder and CEO: "What blockchain
brings to the industry is really just the ability to coordinate and
come to a trusted conclusion on data".

On one side the MetaX platform, provides buyers
(Advertisers) with a scalable, trustworthy solution for
tracking and verifying all advertising impressions. On the other
side, it gives sellers (Publishers) total control
and the ability to retain integrity and full value of their content
to attract premium ad spend. Thanks to MetaX, Frauds are easy to
identify, data related to engagement with the ads are easy to track
and are also secured from a privacy point of view.

The second case is the one of MadHive.
They refer to themselves as the first Blockchain ecosystem
for digital advertising. They focus on the creation of a
trusted pipeline for data exchange and collaboration across the ad
tech value chain. Thanks to the cryptography key server they use,
they can anonymize and encrypt client and order details, as well as
all audience and performance data.

With the distributed ledger, they securely segment and
quickly match audiences across platforms and devices and
properly attribute campaign performance all the way back to its
source. With their architecture, they are able to have workflow
automation in a completely secured environment.

Why this is not the norm yet

As of today, very few other players are going into this
direction. There are various reasons for that, and probably the
most relevant in this case are Scalability and
Velocity.

In fact, to scale such technology is not going to be easy. The
Network to be efficient needs to be as large as
possible, way larger than what it is now. Meaning that
many more computers are required to participate in the process to
democratize even more the platform, and increase the level of
trustworthiness.

Velocity is another big issue, strictly related to the
scalability. Each computer in the network can handle only a
certain number of transactions per second, Bitcoin as of
November 2017 could handle 7/23 transaction per second, and if we
take by contrast, another "financial" service, like PayPal,
back in 2015 they could handle 115 already. The most powerful
blockchain, Ethereum, can handle only a little more than Bitcoin.
Still a long way to go.

However, day after day new businesses are coming in the Blockchain
market, more VCs are investing in the sector and new algorithm are
being tested to solve the main issues of scalability and velocity.
In few years we will probably see if the technology can be adopted
vastly or not.